As tax investigations heat up, HMRC has a lot of catching up to do – what to expect
Over the previous year or so, HMRC and other government offices have been inundated with coronavirus-related issues, but when normalcy returns, normal operations are set to resume. As HMRC resumes its “full swing” of tax inquiries, there is some evidence supporting this.
Following the epidemic, HMRC and other government agencies were left with “a lot of catching up to accomplish,” since coronavirus put numerous tasks on hold. HMRC, on the other hand, may be starting to step up its tax investigation activities.
HMRC’s investigations against taxpayers suspected of tax fraud and avoidance look to be in full force again, according to UHY Hacker Young Group, the accounting network, following a temporary reallocation of resources during the pandemic.
HMRC recently revealed that in Q1 2021, it started 102,000 compliance investigations, up 36% from 75,000 the previous quarter.
This was nearly four times the previous low of 27,000 in the second quarter of 2020.
In addition, HMRC’s additional revenue from compliance activity increased by 29% to £14.2 billion in Q1 2021, compared to £11 billion in the same period in 2020.
The data were discussed by Graham Boar, a partner at UHY Hacker Young.
“HMRC is returning its priority to tax investigations,” Mr Boar stated. It has a lot of catching up to do after the pandemic.
“During the pandemic, HMRC’s resources were limited, and it also took a more liberal approach to taxpayers. That appears to be coming to an end presently.
“Taxpayers with skeletons in their closet should be informed that they may face investigations, fines, and even prison sentences if they do not disclose them. Individuals who owe unpaid tax should contact HMRC first before approaching the authorities.”
HMRC may conduct a tax audit to ensure that a person is paying the correct amount of tax.
Individual taxpayers or companies may be affected.
HMRC will write or call persons to confirm the information they want to verify, which could include:
HMRC may request a visit to the individual they are investigating’s home, their business, or an adviser’s office during a check (this may be unlikely with coronavirus still being an issue).
People may also be invited to visit HMRC, and if they are, they are allowed to bring an accountant or legal consultant with them.
If it sends, HMRC may levy a penalty. “Brinkwire News in Condensed Form.”